A lot of trading – especially these days – revolves around speed.
“Volatility is up!” “The market is moving FAST.” “You have to be in and out quickly, especially in penny stocks.”
To an extent, that’s true.
But Jeff Williams takes a different approach.
Now, Jeff is one of our penny stock guys. He’s a very active trader who doesn’t like to hang onto positions for more than a few days at most.
However, one thing Jeff prioritizes is protecting his money as much as possible.
None of us can completely protect our money, of course. But Jeff takes a wait-and-see approach often. That’s because his goal is to stack winning trades if he can, rather than trying to find the biggest trade possible.
He’s a base hitter – can still hit the home run, but his focus is stringing together wins.
Jeff watches for strength to show up on a penny stock first… not big news, not hype, not speculation.
He showed his Weekend Wiretaps readers exactly what he was talking about in his recent pick – and there’s a lesson for all of us in it.
Jeff Williams here.
“Buy low!”
“Sell high!”
Stock Trading 101, right?
Well, in a sense, that’s true. You do want to buy stocks at low prices and sell them at high prices. That’s how you make a profit, right? Basic math.
But where I disagree with some traders is where those low and high points really are.
See, many traders think “buying low” means trying to grab shares of a stock at the absolute lowest price you can. This means they are trying to find the bottom of a pullback in hopes of maximizing their returns.
That’s where I think a little differently.
To me, I’m not looking just for price points.
I’m looking for trends.
I like to say, “the trend is your friend.”
(I also like to follow up with, “until it’s not,” but we can talk about that some other time.)
By following trends, I am admitting that I often miss attractive setups.
Here’s a dirty little secret about trading: it’s really stinking hard to capture all of a price move.
If you try to anticipate moves before they happen, you’re taking on a whole ton of risk.
And look, you can’t eliminate risk completely. Every trading strategy carries plenty of it. That’s why I always tell people to only trade with money you’re comfortable losing.
However, one way I like to try to manage my risk is by buying into strength.
Think of it like hitching a ride on a train. You can jump on a train and hope or expect that the train will start moving in the direction you need to go, or you can hitch a ride on a train that is already moving in that direction.
It doesn’t guarantee that the train is going to arrive at your destination, of course. But the chances of it getting there are much higher if you already know which way it’s going.
That’s why I buy into strength.
Let’s take a look at my most recent Weekend Wiretaps pick from last Friday.
A lot of traders might look at a chart like this and avoid the trade – TELL is the highest it’s been in months!
But I told traders that I wanted to see TELL go higher before I bought in (it was trading in the $6.20 range at the time).
That’s right: my trigger to make this trade was waiting for the stock to break through a high.
That’s because TELL registered a higher high, higher low pattern. That’s what I want to see!
When that pattern emerges (it looks like steps going up to the right of the chart), I look for increased trading volume underneath it (the green bar at the bottom), and then I pick my target entry and exit points.
Does this pattern guarantee that TELL is going to skyrocket? Will it soar to the $7 or $7.50 range like I’m hoping?
Who knows?
I’m not Nostradamus.
But I do know that, by waiting for it to break through to the higher high and establishing that pattern, I’m giving myself the most educated guess.
The takeaway here is simple: I’m playing the odds. And in this case, we’ll see how it plays out. But I’ve made a lot of trades over the years, and combining this little bit of patience with watching for patterns to develop can be a great way to manage my risk.
You may prefer to work differently.
But if you want to learn how I evaluate trends and patterns, and what I look for when entering and exiting trades, there’s no simpler way than by trying out my Weekend Wiretaps service.
I show you one trade that I make every Friday, and I use that trade as an educational opportunity for you – so that you can learn the foundational principles on which I built my trading career.
And right now, we’ve got a special deal for you that gives you total access to Weekend Wiretaps for just $8.
Click HERE to check it out, and you can learn from my next trade coming up this Friday! See you there!
